Bonds began the day in weaker territory this morning, and they didn't need anyone to twist their arm in getting there. That was our first clue that traders are simply positioned extra defensively ahead of tomorrow's FOMC events (announcement, forecasts, and press conference). Subsequent clues arrived throughout the day as follows: 1. Consumer Confidence was exceptionally strong, yet produced no visible reaction in bonds. This suggests traders had priced in their pre-Fed defensive positioning and weren't keen to move far from there. 2. Similar story with the 5yr Treasury auction. It was weaker than expected, which argues for bond market weakness, yet we're ending the day right in line with morning levels. As always, keep in mind that tomorrow's volatility isn't necessarily…(read more)